11/03/2014

Another Look at Artist Resale Rights

The Financial Times has a report showing UK sales slowing while the rest of the world sees the art market expanding. A recent report shows the UK market contracting by 3% while worldwide sales showed growth of 10%. The report states the contemporary and post war markets are moving more works and sales, as well as collectors to New York.

One of the main reasons for the shift in the important art category is paying of resale rights to artists and heirs if the work remains under copyright. It seems to make sense, especially in the high dollar contemporary and post war markets where the fees would be seen most often. In an international global economy with multiple options, trade will move to where fees and taxes are the lowest.

Also, an interesting aspect of the article is the additionally income generated by art sales, auctions and fairs. The report notes that $5,75 billion on additional and related services in 2013. This included spending on hotels, restaurants and other hospitality related services, conservation, advertising, insurance, shipping and art fairs. And, lets not forget appraisal services.

The Financial Times reports

Britain’s status as a hub for the international art market is under threat from New York and other overseas centres, as new figures show sales slipping in the UK but growing globally.

Sales of fine art and antiques in the UK fell 3 per cent to £8bn in 2013, against growth in worldwide sales of 10 per cent, according to a report by Arts Economics, a research group.

The international art market has seen explosive growth in the past decade, centred on postwar and contemporary art, where valuations have ballooned and auction records have frequently been broken. The sector is the largest in the market, accounting for 39 per cent of sales by value in the UK last year. But Britain’s share of the niche halved in the five years to 2013, from 35 per cent to 15 per cent.

Clare McAndrew, director of Arts Economics, said: “Postwar and contemporary is shifting to New York. If you look at the US, sales have gone way beyond boom era levels. Since 2010 they haven’t grown in the UK at all, they’ve dropped.”

The trend will give fresh support to critics of a Brussels directive obliging dealers and gallerists doing business in Europe to pay a resale charge to artists or their heirs where their work remains in copyright.

The Artist’s Resale Right levy was introduced across Europe in 2006. In the UK, the biggest European art market, it initially covered living artists only but in 2012 was extended to the artists’ heirs for up to 70 years after their death. The duty, for instance, would be payable to the estate of Pablo Picasso on a work painted in 1900 and sold in London.

ARR was designed to level the playing field across the EU, where France had long operated the system of droit de suite, and to encourage other jurisdictions to follow suit, as well as to benefit artists when their work was resold. But the US and Asian markets have thus far introduced no similar measures.

Anthony Browne, chairman of the British Art Market Federation, which represents UK dealers and commissioned the research, said: “The introduction of artists’ resale rights on sales in London – when it does not apply to London’s major global competitors – is now causing a decline in the UK’s international competitive position.”

Mr Browne said ARR was a contributing factor rather than the sole cause of shifts in regional market share. But he pointed to Britain’s continuing strength in parts of the market that were unaffected by the levy because works were out of copyright. Sales of Old Masters in the UK have risen slightly between 2010 and 2013, while the Impressionist and Post-Impressionist category has remained stable.

Asked if UK companies might reduce their transaction charges – at auction the buyer’s premium can be as high as 25 per cent – Mr Browne said British business would then be operating at a lower margin than rivals abroad, further affecting their competitiveness.

With the levy capped at €12,500 for any sale, the Design and Artists Copyright Society says ARR represents a “modest share of the sale price” for artists and their beneficiaries. DACs, which is campaigning for the right to be levied globally, collected £8.4m in ARR in 2013, passing payments to more than 1,400 artists and their estates. “[ARR] successfully balances the interests of artists with the interests of the art trade and recognises the ongoing stake an artist has in the economic value of their work,” it said.

But BAMF argues that the design of the right was flawed, favouring artists who were already highly successful or the wealthy estates of the best-known deceased artists. Mr Browne said: “The emotional arguments about impoverished artists bear no relation to the facts. Most artists will get nothing from the resale rights.
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The Arts Economics report highlighted the value of the art trade to London, which was on full display last month as the Frieze art fair drew hundreds of international collectors, gallerists and dealers to the capital. The report said the sector spent £3.6bn on ancillary services in 2013, including hospitality, conservation, advertising, insurance, shipping and art fairs.

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The Appraiser Workshops blog was developed in 2008 to publish news connected with the personal property profession and to promote the Appraiser Workshops. Content includes appraisal ideas and tips, industry news and events, market trends and updates, surveys, educational opportunities and general commentary about personal property appraising. Visit often. Comments, news, suggestions and content contributions are always welcome.

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Todd W. Sigety, is a certified member of the International Society of Appraisers and is a partner in the Appraiser Workshop, developers of the Good, Better, "Best" Appraiser Workshop. He owns two Antique galleries in Old Town Alexandria, VA where the workshop is held. He currently serves as the President on the National Board of Directors for the International Society of Appraisers. He is also the creator and editor of the Journal of Advanced Appraisal Studies.

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